DAYTONA BEACH — At a time when Halifax Health is forgoing raises for employees and facing financial losses, one hospital commissioner has raised concerns about the public hospital system spending about $500,000 to build new executive offices, a conference room and public restrooms for visitors to the administrative floor. Hospital officials say the project will make it easier for them to conduct business, but Commissioner Fred Costello is questioning the project’s timing — given that Halifax Health has lost money on operations for the past two years and is working to get back to a positive operating margin. “I thought it would be a good message to send to our staff and the community that we are being prudent with trying to delay things that aren’t part of the core mission,” Costello said.He sits on the Halifax Health Board of Commissioners, a seven-member panel appointed by the governor that oversees operations. The majority of the board approved the expenditure at its meeting this week. Ann Martorano, chief operating officer, said the hospital’s leadership team is scattered throughout the sprawling campus. When the new offices are completed — in an area that is currently unfinished — leadership will be together in a centralized place. The project has already been delayed for several years because of the recession, she said. “There is a lot of aggressive competition around us,” Martorano said. “Because of the nature of our own policies, we tend to move slower. I can literally have something I need to talk to a group of executives about and it can literally be five to seven to 10 days before I can actually get them all together. If I could be in the hallway and have them there, I could probably conduct that business much, much quicker.”But Costello, a former state representative from Ormond Beach, said he worries the project’s timing will send the wrong message to the community and the hospital’s roughly 4,000 employees. The hospital has lost money on operations for the past two fiscal years and is facing a large lawsuit set to go to trial in March. Costello said he doesn’t question the merits of the project, but he wanted to wait until the hospital begins turning a positive operating margin before authorizing the expenditure. The administrative space in the hospital’s France Tower will be nearly doubled when construction is finished, going from 4,600 square feet to 8,800 square feet. The addition would free up space for clinical operations in other parts of the hospital, Halifax Health CEO Jeff Feasel said. “It is very difficult having people not be in one location,” he said. “There are a lot of inefficiencies that are drawn from that.” Martorano said that she and Feasel, along with chief financial officer Eric Peburn and Bill Griffin, director of strategic planning, are in the France Tower administrative offices. The expansion project would add office space for chief nursing officer Wanda Gerson, chief revenue officer Arvin Lewis and Alberto Tineo, vice president of operations, among other top hospital officials. The expansion, a hospital spokesman said, is part of a long-term consolidation of administrative space that saves money by reducing leased office space. Hospital Commissioner Karen Jans joined Costello in expressing concern about the project’s timing. While the hospital lost $5.3 million on operations last year, it finished the year in the black when investment income and donations are considered. The hospital is facing a Medicare fraud lawsuit with potential damages of $1.14 billion. Hospital officials deny the allegations and have spent $21 million since the suit was filed in 2009 on their legal defense. Other board members, though, disagreed with Costello, saying the project is relatively small compared to the hospital’s overall budget of $480 million. The hospital is planning to spend $25 million on capital improvement projects.“I think this makes us more efficient,” said Glenn Ritchey, vice chairman of the Board of Commissioners. “A half a million dollars in the whole scope of this thing is really just a drop in the bucket.”

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